Apple Fiscal 2008 by the Numbers
News Analysis. Today, Apple released its annual 10-K, which revealed that fiscal 2008 revenues grew 35 percent from 2007. |
Unlike some other high-tech companies, such as Microsoft, Apple doesn't publicly release fiscal year results along with fourth-quarter results. The data separately comes in the annual 10-K filing. Apple reported $32.479 billion net sales compared to $24 billion a year earlier. Apple's fiscal year ended on Sept. 27.
Apple's cash position moved from $5.5 billion in fiscal 2004 to $24.5 billion in fiscal 2008. Between 2007 and 2008, Apple put an additional $9 billion in the bank.
Gross margins were flat year over year, 34.3 percent to 34 percent. In fiscal 2006, gross margins were 29 percent. Apple has already warned of declining gross margins in fiscal 2009, to around 30 percent.
Apple sold 9.75 million Macs in fiscal 2008, up from 7 million in 2007 and 5.3 million in 2006 for 38 percent and 33 percent growth, respectively. Portables accounted for 62 percent of Mac shipments in both fiscal years. MacBook sales were strong—double-digit growth in all Apple's operating segments.
While year-over-year growth slowed to 6 percent, iPod unit shipments were once again strong—54.8 million compared to 51.6 million in 2007. For comparison, Apple sold 39.4 million iPods in fiscal 2006.
Macs accounted for the majority of revenue—$14.276 billion, up 38 percent from $10.3 billion in 2007. Two years earlier, iPod eked past Macs as major revenue generator. During fiscal 2008, iPod revenue increased by 10 percent, or $848 million.
Apple's net sales per Mac was $1,469, which unsurprisingly is about same as the U.S. average selling price disclosed by NPD. Net sales per Mac changed little from fiscal 2007: $1,463. But net sales per iPod rose slightly, 5 percent, to $167 from $161 a year earlier. Apple benefited from a buying shift towards iPod Touch, which pushed up net sales per unit and revenue growth to exceed unit shipment growth.
I see this foreshadowing future trends: If so many customers were willing to pay more for iPod Touch, how many will simply buy iPhone, particularly for the $199 price (or less in many countries)? Last week, ComScore released data showing that $25,000-$49,999-income households are fastest growing segment buying iPhones. The iPhone is poised to cannibalize iPod sales and, perhaps surprisingly, low-cost Windows PC sales. Yesterday, Apple announced that the so-called father of iPod, Tony Fadell, would take a new role as special adviser to CEO Steve Jobs. The pay's good: $300,000 a year, plus benefits.
Apple's retail sales showed continued growth, with net sales up 53 percent year over year. Average revenue per store was $29.9 million, up from $23.1 million in 2007. Apple opened 50 new stores during fiscal 2008, 19 outside the United States, for a total of 247. Average number of stores open was 211. For comparison, Apple had 165 stores open in fiscal 2006. Retail segment operating income increased from $875 million in fiscal 2007 to $1.3 billion in 2008.
Geographically, sales differed based on region:
- Americas: iPhone, iPod Touch, Mac laptops and iTunes store were main revenue drivers. Mac net sales increased 30 percent to $1.3 billion. MacBook sales were particularly strong. The Americas accounted for 45 percent of net sales during fiscal 2008, down from 48 percent a year earlier. I expect Americas sales to decrease further as iPhone reaches more countries.
- Europe: MacBook and iMac sales, along with iPhone and iTunes Music Store, pushed up Apple net sales by 40 percent year over year. The iTunes Music Store posted year-over-year net sales growth of 79 percent, bolstered in part by increased consumer demand for music and greater availability of video content.
- Japan: Net sales increased 39 percent year over year from demand for iMacs, iPods, iTunes Music Store and Mac laptops. The Japanese market favored iPod nano and Touch over Classic models. Mac net sales increased 42 percent, while unit shipments grew 29 percent year over year.
- Asia-Pacific: Mac portables, iMac and iTunes Music Store all showed strong growth. For iTunes, sales grew 109 percent year over year. Mac net sales increased 52 percent and unit sales by 50 percent.
Apple's U.S. education sales continued to climb—14 percent year-over-year channel sales growth and 19 percent for Mac units. Growth for higher education was 15 percent and 12 percent for K-12 schools.
Research and development investments increased 42 percent, from $327 million in fiscal 2007 to $1.1 billion in 2008. However, as percentage of net sales, R&D increases were flat year over year. Apple attributed $75 million "capitalized" R&D to Mac OS X Leopard and iPhone and another $11 million on new-version Snow Leopard.
Looking ahead, Apple cited a long list potential risks. Global economic uncertainty looms over holiday sales and, more dramatically, first half 2009.
[Please send your tips or rumors to watchtips at gmail.com].
Comments (4)
It seems strange to worry about iPhone "cannibalizing" iPod Touch sales. Generally, one worries about a low-price product cannibalizing sales of a high-price product. The iPod Touch sells for about half the price of the iPhone (counting the iPhone subsidy paid by AT&T). So a more reasonable concern would be whether iPod Touch will cannibalize iPhone sales.
Posted by trrll | November 5, 2008 5:50 PM
Actually, trrll, what you say is quite logical. Why would somebody spend $200 up front for an iPhone with a $100+/month service bill when you could buy an iPod Touch for about the same up front and use an 'el-cheapo' cell phone with a $50+/month service bill. You're talking about saving nearly 50% of the cost of owning an iPhone.
However, now you're carrying two things around to serve the same purpose as one iPhone. The networking capabilities and ease of use of the iPhone significantly outclass the 'el-cheapo' and give you internet access when Wi-Fi is not available to the iPod Touch.
I'll grant, the benefits really depend on how you plan to use the devices. In my own case, I don't use my cell phone for web browsing or texting; it's simply too complex and time-consuming to even try. On the other hand, as long as I use it simply as a telephone, it's hard to beat the fact that making a call is as easy as using a landline. The iPod Touch, then, could be used as an iPod and game device primarily, giving the capability to do quick email checks and/or web research while you happen to be near a Wi-Fi hotspot. Not only would this be cheaper, but also safer since you can't attempt to txt or browse while you're driving down the highway; now one of the greatest causes of traffic accidents both on and off the highways (taking the one commuter train crash for example.)
There are things I like about the iPhone, I'll grant... most of these are features also available in the Touch. But I'm also quite put out with the poor quality of my conventional cell phone despite the supposed quality brand name. It could be worth while for me to get an iPhone to replace my current one and get the benefits of both phone and iPod Touch so that I get the capabilities of both in one purchase... after all, even if I eventually disable the phone part, I'll still have a Touch until it dies.
Posted by Vulpine | November 6, 2008 10:30 AM
Vulpine, you didn't get the point that trrll was making. What we see here between the iPod Touch and the iPhone is not cannibalizing---it's uptrading. It's good for Apple.
Posted by Tom | November 6, 2008 4:24 PM
@Tom:
That's not what he said. trrll clearly stated, "So a more reasonable concern would be whether iPod Touch will cannibalize iPhone sales." This is not up-trading but rather leeching. It seems unlikely that someone buying an iPod Touch would turn around even within 6 months to buy an iPhone as well. I wouldn't and in this time of financial stress I don't think many others would either.
On the other hand, if someone's current cell contract were close to expiring, they might play with an iPod Touch and then realize that the iPhone would give most of the same capabilities as well as an easy to use phone. Since I already have four different iPods (1st-gen, 1st-gen Nano, 3rd-gen 40G (non video) and 80G Classic (video)) I don't really have a need for the iPod capabilities, but the idea of a phone with advanced iPod capability does have my interest... just not enough to really entice me to buy one.
However, if they happened to come up with something about the size of a paperback book with all those same capabilities and a larger screen I could use as an ebook reader...?
Posted by vulpine | November 6, 2008 5:27 PM